Every company relies on talent to succeed, but some more than others. Some businesses compete against relatively short cycle times where innovation really matters and specific groups of motivated individuals determine success or failure. These companies are different. In these companies, the people you pay are more important than the people who pay you. Every company needs a strategy. Every company needs capital. And every company needs competent people. But in talent driven companies, stars make the difference between winning and losing—and they walk out the door each day. Aligning the Stars argues that strategic success is achieved by building an organisation of executive-level stars whose day-to-day performance reinforces and ultimately achieves the goals of the business.

Outstanding firms align stars across business lines, geographies, even generations. But alignment is much easier to conceptualise than to create. Achieving alignment involves managing an organisation as a system in which every decision influences—and is influenced by—every other decision, and then making choices that will reinforce the firm's strategy and values.

STRATEGIC DECISIONS
In talent-driven companies, especially professional service firms, the organisation has to come before the strategy. Because people matter most, a company cannot effectively implement a strategy that its stars will not or cannot follow—or they will leave.

But the downfall of many professional service firms is that they become so encumbered with organisational issues that they ignore their strategy. Or strategic decisions emerge too late. Questions like: "Should we diversify our business? Should we change our ownership form or structure? Should we expand globally? Is bigger really better? How do we achieve our growth targets? How do we compete against new aggressive competitors?" do not get the attention they should.

Interrelated strategic choices, like those above, comprise a firm's strategy. They define how an organisation will differentiate itself from its competitors, who its target clients will be, and the nature of the value proposition the firm will offer to them.

Goals
A firm's goals should reflect its strategy and highlight the few unique circumstances that will affect its future most deeply. Goals define the ambitions of the enterprise, the hoped-for point of arrival along whatever dimensions are most important to the firm and its owners.

Competitive Differentiation
In a competitive marketplace, winning requires that a business serve some set of customer needs better than its competitors. In the competitive market for professional services, the same principle applies: clients award their business to one firm rather than another because they think that the winning firm will do a better job. In the vocabulary of strategy, the winning firm is differentiated along one or more dimensions that matter significantly in the clients' eyes. Differentiation is what gives a firm its competitive edge.

Customer Strategy
In professional services, the adage that no two customers are exactly alike is especially apt. A firm's competitive differentiation depends on its ability to fully meet the specific business and individual needs of certain customers.

Geographic Strategy
The strategic decisions surrounding a professional service firm's target clients are bound up in issues of geographic strategy as well as customer differentiation. Firms face strategic questions such as: To what extent can or should we remain local? What level of presence is required to compete effectively in large markets? What does being "global" mean-a presence in 5 countries or 25? How can that presence be achieved?

Client Value Proposition
The true value proposition to your client is all-inclusive, encompassing both the comprehensive service you provide and the process with which you provide it. In addition, because it is the entire experience of working with an outside professional that matters to the client, your firm's value proposition has a personal element as well. This personal value element is critical to the person purchasing the professional service.

Business Line Strategy
One aspect of value proposition is identifying the lines of business in which a firm engages. Management must make decisions about whether or not to expand the business into new adjacencies and assess the extent to which acquiring another firm will enhance business line strategy.

Service Strategy
When clients purchase a service from professional service firms, it includes a certain level of attention as well as a particular kind of capability from the firm. Do you meet with the client every day or monthly? Do you meet at your office or theirs? Do you involve three client executives in the service process or thirty? These are some questions that determine a firm's service strategy and cost structure, a central aspect of client value proposition.

Pricing Strategy
How professionals price their services is a critical strategic issue for two reasons: it helps define the client value proposition (value at a price), and it drives the firm's economics. Pricing strategy involves many related issues: Do you quote a fee for the project, or price your services on an hourly basis? If it's on a project fee basis, how are overruns and changes of scope accommodated? Do you price differently by geography, by business line, or by customer segment?

Strategic Risks
Strategic risks come in all shapes and sizes, and obviously depend on the particular circumstances of a firm and its marketplace. There are four types of risk common to all professional service firms. These risks are common because they are unavoidable.

Strategic Obsolescence
In a rapidly changing environment, yesterday's strategy is seldom the answer to tomorrow's problems. This is obvious, yet time and again firms maintain the status quo. There are understandable reasons for this head-in-the-sand behaviour. The main one is human nature: people tend to hang on to the comfort of past practices rather than venture into uncharted territory. Absent a crisis, partners in professional service firms tend to stay on track and support only modest adjustments to their strategy.

Strategic Drift
Strategic drift occurs because professionals have their own perspectives, independent of what the firm's leaders may think. Professionals view themselves as running their own businesses. So strategic drift is inherent in the professional service business model. Whether it becomes problematic and costly depends on how it's managed.

Strategic Identity
Professional services is inherently a word-of-mouth business. The intangible, personal nature of the services makes it difficult for potential clients to judge the quality or fit of a law firm, an accounting firm, or a consulting firm, so they ask around.

There are two aspects of strategic identity, internal and external. Both are developed through experience, not PR or marketing. A firm's external strategic identity is its cumulative profile in the marketplace: the way the market defines its capabilities, shortfalls, and personality. Because a firm's external strategic identity lives outside its bounds, and because it compounds over time, it is often inconsistent with a firm's self-image, or its internal strategic identity-the firm's genetic code, the deeply held strategic beliefs that drive the partnership toward desired strategic goals.

Strategic Shortcuts
Professionals like shortcuts because shortcuts save time. Their hardwired orientation is to free up as much precious time as possible for current and potential clients. Normally, this behaviour is appropriate. It encourages higher firm utilisation and reflects the can-do approach required to win in a competitive arena. However shortcuts can also represent enormous risks.

Professional service firms' strategies typically resemble long marches in which greatness is achieved client by client, star by star, day by day. Building a successful firm is akin to building a brick wall: You may want to add many bricks at once, but it's tough to do so without toppling the wall.

This summary draws on excerpts from Aligning the Stars, published by Harvard Business School Press (April 2002). Co-author Thomas J. Tierney is the former Chief Executive of Bain & Company and currently Chairman of The Bridgespan Group.

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Tackling the most important challenges facing professional service firms today, Aligning the Stars offers practical insight on how to:

· Integrate strategy, organisation, and the needs of individual stars
· Develop and motivate accomplished stars-the partner-level professionals who are the firm's managers and owners-as well as its chief revenue producers
· Design people systems to meet the challenge of converting talented recruits into stars
· Manage culture, a central factor in shaping behaviour and motivating stars and thus sustaining alignment
· Create effective organisation structure and firm governance in a "partnership-like" setting
· Effectively lead, without the overarching power and control often embedded in the corporate world
· Shape the personal needs, motivation, and careers of individuals